This month I had the pleasure of speaking to members of a large employers association in North Carolina. It was an eye opening experience.
Most agents I work with have a comfort zone of accounts with which they work. Many believe that employers that are larger and have more complex programs must be getting the right advice. My experience last week tells me that this is not always the case. This “comfort zone” is simply an artificial limitation.
I spoke with the CFO of a large regional demolition company with a $100,000 workers’ compensation deductible. We were discussing her workers’ comp classifications. Even from our short conversation, it was evident that many of her workers were misclassified, causing them to be paying more than they should. Who knows how many years this company has been overcharged.
More troubling was this story: The CFO shared the fact that the company recently received a bill from its insurance company for something from 2008. She was unsure what the bill was for, so she called her broker. What do you think the broker told her? His response was simply “It must be in the contract, go ahead and pay it.”
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So that is all? “Just go ahead and pay it”? From the sparse information provided, it is virtually impossible to know if the bill was appropriate. However, there is no reason the broker should not have been able to explain precisely why the bill was the amount it was, and also show the wording in the contract that allowed the insurance company to issue that bill.
When employers have a large deductible, it is easy to ignore the experience mod, because the impact it has on the premium is lessened.
To emphasize the importance of the experience mod, I spoke to the safety manager of a 1,000-employee engineering firm. For this particular company, they must keep the mod below 1.0 to bid on jobs. The safety manager shared with me that he not only keeps track of the company wide experience mod, but also their experience mod per state, which has allowed them to earn jobs, even when their companywide mod has climbed over 1.0.
What lessons can the main street agent take away from these stories? Neither the size nor the complexity of the employer’s program matters. If you know the rules, then you have the opportunity to help. Understanding the intricacies of classifying a business and the experience mod can pay dividends for both employers and agents.
Do not take for granted than an employer is too large for you to work with. When you know the rules, it is a rare employer that cannot use your help.